Weekly Market Recap – November 14

Nov 14, 3:56 pm
September 2nd 2014
Market recap for the week ending November 14

Japanese Yen reacts to conflicting news

In a week marked by low volatility, the Japanese Yen was the sole currency which was trading on account of the conflicting news from Japan. While initially, the Yen weakened on rumors of Shinzo Abe calling for snap elections and a delay to the sales tax hike, the rumors were quickly put to rest by an official a day later, only to reignite the speculations as a member of the LDP party commented that the Japanese Premier was indeed considering calling for early elections in December. The Yen which has already weakened on the surprise monetary policy expansion to the QE saw very wild ranging price action patterns. It is not yet clear as to whether the rumors are true and would only take for an official confirmation to see some stability in the Yen crosses.

  • Japan Bank lending y/y 2.4%, up from 2.3% previously
  • Consumer confidence drops to 38.9 vs. estimates of 40.6 and down from 39.9 previously
  • Economy watchers sentiment declines to 44 vs. estimates of 49.2 and down from 47.4 previously
  • Preliminary machine tool orders y/y 31.2% vs. 34.7% previously
  • Core machinery orders m/m rises 2.9% vs. -1% estimates but down from 4.7% previously
  • PPI y/y 2.9% vs. 3.4% estimates
  • Industrial production 2.9%

Sterling weakens on dovish inflation outlook

The British Sterling gave up any hopes of a rally as the Bank of England’s inflation report painted a dovish picture with expectations of the year end inflation rate to fall well below the BoE’s 2% target. Inflation is expected to remain subdued well into the first quarter of the year. The only hint of hope was that the BoE expects to see October 2015 as a potential period of starting its interest rate hike. Latest ILO unemployment data from the UK came out mixed but well supportive of a strengthening labor market.

  • Average earnings index 3m/y up 1% vs. 0.9% estimates and up from 0.7% previously
  • Unemployment rate unchanged at 6% vs. 5.9% estimates

Eurozone Growth Soft, inflation mixed

Friday’s markets were clearly focused on the European Union with a host of GDP data from the Eurozone. The day started off with France and Germany GDP numbers beating estimates modestly. The French economy grew 0.3% in the third quarter above estimates of 0.1%, while Germany’s GDP in the third quarter was in line with estimates at 0.1%, barely a notch below what would have technically been a recession. Germany’s GDP y/y did manage to post higher growth at 1.2% vs. 0.8%. Overall, the GDP numbers for Eurozone saw 0.2% growth on quarterly basis and a 0.8% growth annually, while CPI was softly higher at 0.4% and core CPI unchanged at 0.7% y/y. With data coming close to estimates, the Euro’s reaction was mostly muted.

  • Italian industrial production m/m -0.9% vs. 0.2% estimates
  • Sentix investor confidence -11.9 vs. -6.9 estimates
  • Eurozone industrial production m/m 0.6% in line with estimates
  • German final CPI m/m -0.3% as expected
  • France GDP q/q 0.3% vs. 0.1%
  • Germany GDP q/q 0.1% in line with expectations
  • Italy GDP q/q
  • Eurozone final CPI y/y 0.4%
  • Eurozone flash GDP q/q 0.2%
  • Eurozone final core CPI y/y 0.7%

USD manages a rebound on retail sales data

The Greenback started on a weak note this week in a follow through of a mixed NFP last Friday. Lack of fundamentals left the Greenback susceptible to technical trading and other news. However, the latest retail sales data for the month showed a pickup in retail spending with core retail sales ticking higher to 0.5% while retail sales ticked up 0.3%, after last month’s decline.

  • Retail sales m/m 0.3% vs. 0.2% estimates
  • Core retail sales m/m 0.5% vs. 0.4% estimates
  • Import prices m/m -1.3% vs. -1.5% estimates

Australian Dollar still under pressure by RBA

Fundamentals from Australia came out mostly in line with expectations but the Aussie continues to be under pressure by RBA officials. Adding to the usual rhetoric, RBA’s assistance governor, Kent Wheeler in his speech noted that the RBA could consider FX intervention as the exchange rate was still considered to be high. Although the Aussie initially reacted to the news, AUDUSD managed to pare its losses. But any signs of a rally are likely to see the RBA officials hammer down on the AUDUSD exchange rate.

  • Home loans m/m decline -0.7% vs. -0.3% estimates
  • NAB business confidence drops to +4 from +5 previously
  • Westpac consumer sentiment 1.9%, up from 0.9% previously
  • MI inflation expectations 4.1% vs. 3.4% previously
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